| Taxpayers are usually terrified of the word "capital | | | | make a profit exceeding $250,000 or $500,000, you |
| gains." You can define capital gains as the profits you | | | | have to pay taxes only on the amount which exceeds |
| gain from the sale of an asset. As per capital gains | | | | that. |
| tax law, you have to pay taxes on the profits you | | | | If you would like to sell a house that you have been |
| make when you sell an asset. You can make a capital | | | | renting, you will be interested to know that you can |
| gain on assets such as land, stocks, or bonds. On the | | | | consider it to be your primary residence, provided you |
| other hand, if you made a loss on a piece of property, | | | | live in it at least two years during a span of five years |
| it is considered to be a capital loss for which you get a | | | | before you sell it. Several people who invest in real |
| tax deduction. | | | | estate use this convenient clause to escape capital |
| A clause in the capital gains tax law permits you to | | | | gains tax. All they have to do is to live in the property |
| avoid paying capital gains tax even if you make a | | | | they have been renting for two years just before |
| huge profit while selling an asset. Real estate in one | | | | selling it. |
| area in which you can dodge capital gains tax. Real | | | | Capital gains tax law has yet another clause that can |
| estate is known to be a very profitable venture; its | | | | help you avoid paying taxes on profits made on a |
| price never goes down as long as you own it. The | | | | place you have been renting even if you don't live in it |
| good news is that IRS has enabled tax payers, who | | | | for two years. You simply have to invest your profits |
| invest in real estate, to avoid paying taxes on the | | | | in more real estate property, and you can escape |
| profits they make on it. | | | | paying capital gains taxes. |
| As per capital gains tax law, if you are single and | | | | You have to pay taxes on profits made out of selling |
| make a profit of less than $250,000 or if you are | | | | bonds. If you have held the stock for five or more |
| married and make a profit of less than $500,000 on | | | | years, you have to pay a 15 percent capital gains tax . |
| the sale of your primary residence, you don't have to | | | | However, if you have held it for less than five years, |
| pay any capital gains tax. So, unless you make a really | | | | you have to pay almost double, that is 30 percent. |
| big profit while selling your residence, capital gains tax | | | | Your tax professional is the best person to answer |
| is not something you have to worry about. Even if you | | | | any queries you might have on capital gains tax law. |